PLR 201231003: IRS grants more time to file the 2010 estate basis election

Plain-English summary

The personal representative of an estate asked for more time to file Form 8939 and make the election under IRC § 1022 for an individual who died in 2010. A qualified tax professional had been retained to prepare the form, but the filing was not completed by the applicable deadline. The IRS concluded that the requirements of Treas. Reg. § 301.9100-3 were satisfied and granted a 120-day extension. The representative must attach a copy of the ruling to Form 8939.

Ruling snapshot

• Question: May the estate file Form 8939 late and still make the § 1022 election?
• Outcome: Approved
• Key authorities: IRC §§ 1022 and 9100; Treas. Reg. § 301.9100-3; Notice 2011-66.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201231003
Third Party Communication: None
Release Date: 8/3/2012
Date of Communication: Not Applicable
Index Number: 9100.00-00, 1022.00-00
Person To Contact:
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------------------------------, ID No. ------------
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Telephone Number:
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In Re: ----------------------------------------- Refer Reply To:
CC:PSI:B04
PLR-104523-12
Date:
April 16, 2012

Legend:

Decedent = -----------------------------

Dear -------------:

This responds to your personal representative’s letter of January 27, 2012, requesting an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to file a Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, and thereby make a timely election under section 1022.

The facts and representations submitted are as follows. Decedent died in 2010.
The executrix for Decedent’s estate retained a qualified tax professional to prepare the Form 8939. Executrix of Decedent’s estate is requesting an extension of time to file the Form 8939 to make a timely election under section 1022 pursuant to § 301.9100-3.

Law and Analysis:

Section 1022(a) provides that property acquired from a decedent who died after December 31, 2009, is treated as transferred by gift, and the basis of the person acquiring the property from such a decedent is the lesser of the adjusted basis of the decedent or the fair market value of the property at the date of the decedent's death.

Section 1022(b)(1) provides, in general, that the basis of property under section 1022(a) is increased by basis increase that is allocated to the property.

Section 1022(b)(2)(A) provides, in general, that basis increase is the portion of the aggregate basis increase that is allocated to the property.

Section 1022(b)(2)(B) and (C) provide that the aggregate basis increase is $1,300,000; and that the aggregate basis increase is increased by--(i) the sum of the

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amount of any capital loss carryover under section 1212(b), and the amount of any net operating loss carryover under section 172 that would (but for the decedent's death) be carried from the decedent's last taxable year to a later taxable year of the decedent, plus (ii) the sum of the amount of any losses that would have been allowable under section 165 if the property acquired from the decedent had been sold at fair market value immediately before the decedent's death.

Section 1022(c)(1) provides that in the case of property that is qualified spousal property, the basis of such property under section 1022(a) (as increased under section 1022(b)) is increased by spousal property basis increase allocated to the property.

Section 1022(c)(2)(A) provides, in general, that spousal property basis increase is the portion of the aggregate spousal property basis increase which is allocated to the property. Section 1022(c)(2)(B) provides that the aggregate spousal property basis increase is $3,000,000.

Section 1022(d)(1)(A) provides, in general, that the basis of property acquired from a decedent may be increased under section 1022(b) or (c) only if the property was owned by the decedent at the time of death. Section 1022(d)(1)(B) describes property that is considered to be owned by the decedent at the time of death.

Section 1022(d)(2) provides that the basis adjustments under sections 1022(b) and (c) shall not increase the basis of any interest in property above its fair market value in the hands of the decedent as of the date of the decedent's death.

Section 1022(d)(3) provides, in general, that the executor is to allocate the basis adjustments under sections 1022(b) and (c) on the return required by section 6018 and that any allocation made may be changed only as provided by the Secretary.

Section 1022(e) describes property that is considered to be acquired from the decedent for purposes of section 1022.

Notice 2011-66, 2011-35 I.R.B. 184, section I.A. provides that the executor of the estate of a decedent who died in 2010 makes the election under section 1022 by filing a Form 8939 on or before November 15, 2011. (Notice 2011-76, 2011-40 I.R.B. 479, extended the due date of the Form 8939 and thus, the election, from November 15, 2011 to January 17, 2012.)

Notice 2011-66, section I.D.1, provides that the Internal Revenue Service will not grant extensions of time to file a Form 8939 except in four limited circumstances provided in section I.D.2. Under this section of Notice 2011-66, an executor may apply for relief under § 301.9100-3.

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Based on the facts submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. Therefore, the executrix of Decedent’s estate is granted an extension of time of 120 days from the date of this letter to file the Form 8939 for Decedent’s estate thereby making a timely election under section 1022. A copy of this letter should be attached to the Form 8939.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.

Sincerely,

Curt G. Wilson
Associate Chief Counsel
(Passthroughs & Special Industries)

James F. Hogan
By:_____
James F. Hogan
Office of Associate Chief Counsel
Chief, Branch 4
(Passthroughs & Special Industries)